Sarraga vs. Banco Filipino Case Digest

DANTE SARRAGA, SR.
and MARIA TERESA SARRAGA, petitioners, vs. BANCO FILIPINO

SAVINGS AND MORTGAGE BANK, respondent.
G.R. No. 143783. December 9, 2002
FACTS:
Spouses Dante Sarraga, Sr. and Maria Teresa Sarraga, petitioners, were the absolute owners
of three (3) parcels of land, one of which is Lot 416-B, situated in Poblacion, Cagayan de Oro
City, and the other two, Lots 1053-A and 1053-B, in Lapasan, same city.
Sometime in the early 1980s, petitioners mortgaged their lots to Banco Filipino Savings and
Mortgage Bank (Banco Filipino), respondent, as security for a loan in the amount of
P3,618,714.59. Petitioners defaulted in the payment of their loan. Consequently, Banco Filipino
foreclosed the mortgage.
On June 29, 1984, Banco Filipino was placed in conservatorship by the Central Bank of the
Philippines. On January 25, 1985, it was ordered closed and placed under receivership and
liquidation. On April 9, 1985, or before the expiration of the period for the redemption of the lots,
petitioner Dante P. Sarraga sent a letter to Banco Filipinos receiver-liquidator offering to redeem
the same. On July 2, 1985, Deputy Receiver Arnulfo B. Aurellano wrote petitioners that at this
stage of the liquidation of the bank, we are not yet selling the aforesaid properties.
Since petitioners were not allowed to redeem their lots within the period prescribed by law, titles
thereto were consolidated in the name of Banco Filipino.
On October 10, 1986, petitioners received a letter from Banco Filipino recognizing their intention
to redeem their lots. Later, Banco Filipino, through its liquidators, started negotiating with
petitioners on the terms of redemption.
Finally, on October 30, 1990, Mr. Renan Santos, then Banco Filipinos liquidator, wrote
petitioners allowing them to repurchase the lots for P8,506,597.73, with 12% interest per
annum, under the terms stipulated therein. The terms include, among others, that petitioners
may pay by installments and that upon full payment of the repurchase price, Banco Filipino shall
execute the corresponding deed of sale for the three (3) lots in their favor. They were
likewise granted the power to manage and administer the building located in Lot 416-B. The
terms were later embodied in a Memorandum of Agreement (MOA) signed by the parties.
On May 16, 1991, Banco Filipino formally conveyed to petitioners the two (2) lots (Lots 1053-A
and 1053-B) located in Lapasan, Cagayan de Oro City.
On October 30, 1992, petitioners paid in full the total repurchase price for the three (3) lots.
However, Banco Filipino refused to execute the corresponding deed of sale and turn over Lot
416-B to petitioners.
Instead, Banco Filipino, on April 5, 1993, filed with the Regional Trial Court, Branch 38,
Cagayan de Oro City, a complaint4 against petitioners for quieting of title, recovery of ownership
and possession, accounting and damages.
On April 27, 1993, petitioners filed their answer with counterclaim. They were represented by
Atty. Florentino G. Dumlao, Jr. who formally entered his appearance as their counsel of record.
However, prior to the pre-trial, Atty. Dumlao suffered a mild stroke, incapacitating him from
participating actively in the proceedings, prompting petitioners to hire the services of another
counsel, Atty. Rogelio Bagabuyo. While the latter appeared for the petitioners during the hearing
and signed pleadings for them, Atty. Dumlao remained petitioners counsel of record. As such,
the trial court continued to serve pleadings, motions, processes, and other documents upon
Atty. Dumlao.
On June 1, 1998, the trial court rendered a decision declaring the sale and conveyance of lots
1035-A and 1035-B valid but lot 416-B and the building therein was ordered to be immediately
relinquished and surrendered to the bank.
On July 1, 1998. petitioners filed a motion for reconsideration,8 signed by both Attys. Dumlao
and Bagabuyo. On September 3, 1998, the trial court issued an order9 denying petitioners
motion. On September 10, 1998, the order was received by Ms. Llerna Guligado, a newly-hired
clerk at the office of Atty. Bagabuyo. Owing to her lack of work experience in a law office, she
merely left the court order on her desk and eventually it was misplaced. She failed to bring the
matter to the attention of Atty. Bagabuyo when she resigned on September 15, 1998. The day
before, or on September 14, 1998, Atty. Bagabuyo was appointed Senior State Prosecutor in
the Department of Justice. Due to his excitement and relocation to Manila, he failed to apprise
Atty. Dumlao on the status of the case.
Concerned that no action had been taken on their motion for reconsideration of the Decision,
petitioners, on December 7, 1998, verified its status. In the trial court, they found that the
records of the case were already transmitted to the Court of Appeals due to a partial appeal
interposed by Banco Filipino. This prompted petitioners to file with the trial court a notice of
appeal which was denied for being late. Eventually, they filed a petition for relief from judgment.
As a result, the Appellate Court rendered a decision dismissing their petition.
ISSUE:
1) whether Atty. Bagabuyo was negligent which prevented petitioners from filing a timely notice
of appeal; and 2) if so, whether such negligence is binding upon petitioners.
RULING:
1. Obviously, Atty. Bagabuyo was negligent which prevented petitioners from filing a
timely notice of appeal. Atty. Bagabuyo knew that his clerk has no work experience in a
law firm. He should have supervised her office performance very closely considering the
importance of his legal calling. Time and again this Court has admonished law offices to
adopt a system of distributing and receiving pleadings and notices, so that the lawyers
will be promptly informed of the status of their cases. Thus, the negligence of clerks
which adversely affect the cases handled by lawyers is binding upon the latter.
2. Nothing is more settled than the rule that the negligence of counsel binds the client.
However, the application of the general rule to a given case should be looked into and
adopted according to the surrounding circumstances. Thus, exceptions to the said rule
have been recognized by this Court: (1) where reckless or gross negligence of counsel
deprives the client of due process of law; (2) when its application will result in outright
deprivation of the clients liberty or property; or (3) where the interests of justice so
require. In such cases, courts must step in and accord relief to a client who suffered
thereby.
Here, we find that the negligence of Atty. Bagabuyo falls under the said exceptions. Indeed, he
committed gross negligence. Petitioners were deprived of their right to appeal when he failed to
inform them immediately of the denial of their motion for reconsideration of the trial courts
decision. Ultimately, this will result in the deprivation of their property, specifically Lot 416-B.
CANON 18 - A LAWYER SHALL SERVE HIS CLIENT WITH COMPETENCE AND DILIGENCE.
Rule 18.03 - A lawyer shall not neglect a legal matter entrusted to him, and his negligence in
connection therewith shall render him liable.
Rule 18.04 - A lawyer shall keep the client informed of the status of his case and shall respond
within a reasonable time to the client's request for information.
Thus, the petition was GRANTED. The challenged Decision of the Court of Appeals dated June
20, 2000 in CA-GR SP No. 53765 was SET ASIDE. The Regional Trial Court was DIRECTED to
grant the petition for relief filed by petitioners and to GIVE DUE COURSE to their notice of
appeal.

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DANTE SARRAGA, SR.

and MARIA TERESA SARRAGA, petitioners, vs. BANCO FILIPINO

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